DekaBank fortunes set to see recovery
Germany’s DekaBank has announced a host of sweeping measures aimed at re-invigorating its real estate fund arm, which last autumn seemed near collapse amid management scandals and billions of euros in investor outflows from its core German real estate fund.
The measures include installing new management for the fund arm, strengthening its corporate governance and keeping its core real estate fund, which suffered e2.7bn in outflows in 2004, alive.
Deka said that as of 01 June, Reinhardt Gennies would take over as the new chief executive of its real estate fund arm, called Deka Immobilien Investment (DII). Gennies’ deputy, Walter Helbach, already joined Deka on 01 March.
However, Deka has yet to find a replacement for
its former chief executive Axel Weber, who was forced out on 18 March mainly because of the
troubles at DII. Fritz Oelrich is currently acting
Gennies replaces Willi Alda, who, along with DII’s entire management board, was dismissed last October after lying about the true value of Deka’s investments in German real estate.
A month before Alda’s dismissal, Deka threw out Michael Koch, another DII executive, for his role in a bribery scandal involving investments in Frankfurt real estate objects.
The Alda and Koch affairs stemmed from poor corporate governance at Deka, which like major German companies, has a supervisory board that keeps watch over management.
As a result of the affairs, Deka said a special committee would be created to monitor the fund company’s real estate investments on behalf of its supervisory board.
Finally, Deka reaffirmed that closing its core German real estate fund was “completely out of the question”. It noted that between a e1.4bn capital injection from its shareholders last autumn and several recent property sales by the fund, its long-term liquidity was secure.
The German fund, whose volume is currently e5bn, continues to suffer investor outflows of between e4m and e7m per day owing both to the weak German real estate market and the knock-on effect of the scandals at DII.
Yet Deka stressed that in the mid-term, the real estate fund’s fortunes would bounce back amid a general recovery of the German real estate market.